CoalWire 118, January 28, 2016

editor’s note

The two major themes of the last week have been increased regulation of coal and divestment. Increased regulation has come in the form of two court wins over mines and power plants in the US, and regulators in the Philippines, Brazil and India clamping down on coal-dust pollution. Divestment decisions include California’s Insurance Commissioner requesting insurance companies to voluntarily divest from thermal coal and a private Indian power company announcing plans to sell its proposed 4000 megawatt (MW) Krishnapatnam power station, as it would be unprofitable based on imported coal.

Bob BurtonCoalWire Editor

campaigns

Vietnam Scales Back Coal Plans

In recent public comments Vietnam’s Prime Minister Nguyen Tan Dung has signalled a reduced role for new coal-fired power stations in the country’s power plans and an expanded role for renewable energy. In his comments Dung said the government would “review all coal-fired power plants” in the current Power Development Plan and “halt any new coal power development.” Vietnam currently has about 41,000 MW of new coal plants under discussion and a further 12,000 MW under construction. It has the fourth largest coal plant pipeline in the world after China, India and Turkey. However, the exact magnitude of the shift away from new coal plants will not be known until the latest Power Development Plan is made public. (GreenId,EndCoal)

top news

Reliance Power dumps Indian ‘Ultra-Mega’ project: Reliance Power has announced that the 4000 MW Krishnapatnam ‘Ultra Mega Power Project’ in Andhra Pradesh, which it won the right to develop in 2007, is no longer viable due to the increased cost of imported Indonesian coal. Reliance Power wants the state government to buy the project and its assets, with the Andhra Pradesh Energy Secretary Ajay Jain expressing optimism that the plant could be viable if it was allocated domestic coal. (Livemint,CoalSwarm)

Brazil court sets deadline on coal port pollution cleanup: A Brazilian appeals court has given Vale 60 days to prepare a pollution control plan for its iron ore and coal terminals at the port of Tubarao. The decision overturned a lower court decision shutting the terminals down from January 21 until pollution control measures were implemented. In the first nine months of 2015, 8.9 million tonnes of metallurgical coal was imported through the port for ArcelorMittal and other steel producers. The court rulings follow a police investigation of Vale’s port operations after the devastating collapse in October 2015 of a tailings dam at Vale and BHP Billiton’s Samarco iron ore mine in the neighbouring state of Minas Gerais. (Reuters,Reuters)

Thai military regime fast-tracks coal plants: Using the provisions of the interim constitution adopted by the Thai military regime, Prime Minister Prayut Chan-o-cha has issued an order to override planning and environmental constraints for 14 power stations including the proposed Krabi and Songkhla coal plants. The proposed plants in the country’s south have encountered broad opposition, with residents and environmental groups calling on the Prime Minister to reverse his decision. (Bangkok Post,The Nation)

Court directs US agency to reassess mine plan: A US District Court judge has ruled that the Interior Department “failed to take a hard look” at the proposed expansion of Cloud Peak Energy’s Spring Creek mine in Wyoming. Environmental groups had argued the 106 million-tonne mine expansion would contribute to climate change and have a range of other environmental impacts which had not been properly considered. Judge Susan Watters directed the Interior Department to re-examine the proposed mine expansion in the next nine months. (Billings Gazette,Northern Plains Resource Council)

Federal Court of Appeals rejects challenge to Clean Power Plan: The Federal Court of Appeals has rejected a bid by 27 states and dozens of companies and lobby groups to block the implementation of the Obama Administration’s Clean Power Plan. The states had sought a stay on the implementation of the plan pending the completion of a lower court case which is set to be heard on June 2. The Clean Power Plan requires states to reduce greenhouse gas emissions from power plants by 32 per cent by 2030. (New York Times)

Australia weakens coal licence conditions: The Australian Government has watered down environmental licence conditions for at least seven coal mines operated by BHP Billiton, Glencore and Whitehaven Coal. The changes allow BHP Billiton to vary management plans for endangered species without ministerial approval, while some conditions affecting Glencore’s operations were revoked. (Sydney Morning Herald)

Philippines: Manila City shuts down coal stockpile due to pollution of neighbourhood.

US: Powder River Basin mines’ production slumped by 16.8 million tonnes in 2015.

companies + markets

Californian insurance regulator flags coal divestment: California’s Insurance Commissioner, Dave Jones, has requested “all insurance companies doing business in California to voluntarily divest from their investments in thermal coal.” He will also require all insurance companies to annually disclose their investments in coal and other fossil fuels, with their returns made publicly available. While the divestment call is voluntary, the request increases pressure on insurance companies to exit coal investments. California is the largest insurance market in the US and the sixth largest in the world. (California Department of Insurance,Bloomberg)

US agency doubts Wyoming is enforcing bonds law: The US Office of Surface Mining and Reclamation (OSM) has directed Wyoming regulators to investigate whether the reclamation bonds of Arch Coal and Alpha Natural Resources, which are operating while bankrupt, are adequate to cover the rehabilitation liabilities of their mines in the state. The OSM wrote that it “has reason to believe” that Wyoming regulators were allowing the companies “to operate in violation” of an agreement which requires companies to hold sufficient insurance for rehabilitation costs in order for their mining permit to be valid. (Caspar Star-Tribune)

China announces steel production cuts:Chinese Premier Li Keqiang has announced that 100 to 150 million tonnes of crude steel production capacity will be shut. However, he did not specify the timetable for the closures. A rapid increase over the last decade in Chinese steel production buoyed the seaborne market for metallurgical coal. In 2015 crude steel production fell by over 2 per cent to 804 million tonnes, the first fall in 34 years. Analysts estimate that China’s surplus steel production capacity could be between 200 million and 300 million tonnes. (Xinhua,Livemint)

China’s economic shift prompts Moody’s downgrades: The slowing Chinese economy and its shift away from reliance on heavy industry has prompted the financial ratings agency Moody’s to place dozens of coal mining and energy companies on review for a possible ratings downgrade. Coal companies under review include Cloud Peak Energy and Bowie Resource Partners in the US, Brazil mining giant Vale which owns mines in Australia and Mozambique, South 32 which has mines in South Africa and Australia and Vietnam’s coal mining company Vinacomin. (Moody’s,Moody’s)

Rio Tinto continues exit from coal: Rio Tinto has agreed to sell its approved but as yet undeveloped Mt Pleasant mine in the NSW Hunter Valley for US$224 million plus royalties to a subsidiary of the Indonesian-headquartered Salim Group. The company estimates the mine has 474 million tonnes of marketable reserves based on March 2015 data. In the last two years Rio Tinto has sold its stake in the Clermont mine in Queensland, its loss-making Benga mine in Mozambique and has an agreement to sell its 40 per cent in the Bengalla mine in the NSW Hunter Valley. (Rio Tinto,Sydney Morning Herald)

Ban on coal for home heating could hit Polish coal: A ban on the use of coal stoves by 2019 in the city of Krakow, the first city to adopt a ban under a new anti-smog law, will increase financial pressure on Polish coal-mining companies. Sales of coal for household use are a significant and profitable local market, unlike wholesale sales to coal-fired power stations. (EnergyDesk)